Rent vs buy calculator
Compare renting and buying with a worked example tracing loan payments, home equity, maintenance and changing property-value assumptions.
By MarkMyProperty · Updated
Rent vs Buy Calculator
Enter valid amounts and a time period to see your estimate. Amounts must be non-negative; rates and periods must stay within the limits shown by each field.
Home equity is estimated property value minus the remaining loan and can be negative. Results deduct the modelled payments and maintenance; they are not cash in hand or a complete net-worth comparison.
Estimates use your inputs in one currency; selecting another currency changes the unit, without converting amounts. Buyability uses your chosen share of income and is not lender approval. Rent vs Buy compares home equity minus down payment, loan payments and maintenance against investing the down payment minus rent. It excludes taxes, transaction costs and investing monthly cash-flow differences.
How the calculation works
The model uses a fixed loan rate and equal monthly principal-and-interest payments, stopping payments at the loan term. Each comparison year pays twelve months of the current rent and applies maintenance to the property value at the start of that year; value and rent then change by your annual assumptions. The renting scenario compounds only the initial down payment at your chosen return. Home equity can be negative when the remaining loan exceeds the estimated property value.
Formula
Home equity = estimated property value − remaining loan. Buying result = home equity − down payment − loan payments − maintenance. Renting result = final invested down payment − initial down payment − rent paid. Difference = buying result − renting result.
Worked example
In the fictional five-year scenario below, the loan payment is 800 and rent is 800 monthly in generic currency units. With no property-value change, the buying result is −6,000 and the renting result is −48,000: buying is ahead by 42,000 within this simplified model, before excluded costs. Home equity of 72,000 is not the buying result or cash in hand.
What the estimate leaves out
This is not a complete net-worth or occupancy-cost comparison. It excludes taxes, insurance, association fees, purchase and sale fees, utilities, moving costs, rental deposits and investing monthly cash-flow differences. Unknown or excluded costs are not zero in real life. The maintenance percentage follows modelled property value, which may not reflect repair costs. Interest, rent growth, property changes and investment returns are assumptions, not quotes or forecasts. Check actual terms and local requirements separately.
Enter an explicitly fictional scenario
Use these ten inputs to reproduce the arithmetic. All monetary amounts are generic currency units; select one actual currency if you enter your own scenario. Changing the currency label does not convert an amount. Zero interest and zero growth isolate the calculation, not realistic lending terms or recommended assumptions.
The example uses whole years, a 20% down payment and maintenance of 1% of the modelled value each year. Neither percentage is a recommendation or a local cost benchmark. Replace every assumption with relevant evidence for your comparison.
| Calculator field | Example input | Period or meaning |
|---|---|---|
| Home purchase price | 120,000 | Initial property value |
| Down payment (%) | 20 | 24,000 initially; loan principal is 96,000 |
| Annual loan interest (%) | 0 | Fixed zero interest for arithmetic only |
| Loan term (years) | 10 | 120 monthly payments |
| Monthly rent | 800 | 9,600 in the first comparison year |
| Annual rent increase (%) | 0 | Rent remains unchanged |
| Annual property value change (%) | 0 | Baseline value remains unchanged |
| Annual maintenance (% of value) | 1 | Applied to value at the start of each year |
| Annual return on invested down payment (%) | 0 | Initial 24,000 remains 24,000 |
| Comparison period (years) | 5 | 60 loan payments and 60 months of rent |
Trace the baseline result
At zero interest, the 96,000 loan over 120 months costs 800 per month. After 60 payments, 48,000 remains owed. Equity is 120,000 − 48,000 = 72,000 before any sale costs. That equity is not a gain of 72,000: the buying calculation also deducts the initial down payment, payments and modelled maintenance.
Buying result = 72,000 − 24,000 − 48,000 − 6,000 = −6,000. Renting result = 24,000 − 24,000 − 48,000 = −48,000. Difference = −6,000 − (−48,000) = 42,000. Both results can be negative while one is ahead within the model. The interface rounds monetary results to whole currency units; these tables retain decimals where needed to show the arithmetic.
| Component | Currency units | Calculation |
|---|---|---|
| Estimated property value | 120,000 | No assumed value change |
| Remaining loan | 48,000 | 96,000 − (800 × 60) |
| Home equity | 72,000 | 120,000 − 48,000 |
| Loan payments | 48,000 | 800 × 60; principal and interest only |
| Maintenance | 6,000 | 120,000 × 1% × 5 |
| Rent paid | 48,000 | 800 × 12 × 5 |
| Buying result | −6,000 | Equity − down payment − loan payments − maintenance |
| Renting result | −48,000 | Final invested down payment − initial down payment − rent paid |
| Difference | 42,000 | Buying result − renting result; excluded costs may change the comparison |
Change one assumption and retain negative equity
As a sensitivity exercise, change only Annual property value change to −20%. This arbitrary annual fall is not a prediction. After five years, the modelled value is 120,000 × 0.8^5 = 39,321.60, while the remaining loan is still 48,000. Equity is therefore −8,678.40; treating it as zero would hide the loan shortfall in the model.
Maintenance becomes 4,033.92 because this model applies the chosen percentage to each year’s starting value. Real maintenance bills need not fall with property prices. The buying result becomes −84,712.32 and renting remains −48,000, so renting is ahead by 36,712.32 under these assumptions. A different interest rate, rent path, return or omitted cost can change that result.
| Component | 0% annual value change | −20% annual value change |
|---|---|---|
| Estimated property value | 120,000 | 39,321.60 |
| Home equity after the remaining loan | 72,000 | −8,678.40 |
| Maintenance over five years | 6,000 | 4,033.92 |
| Buying result | −6,000 | −84,712.32 |
| Buying result minus renting result | 42,000 | −36,712.32 |
Compare actual offers and missing costs separately
Collect dated sale and rental details for comparable properties: location, offered space, area basis, condition and included items. An asking amount is not a completed transaction price or a valuation. Use the property map and actual listings to research context, then check the evidence before relying on a comparison.
Write down excluded costs and payment timing separately instead of assuming they are covered by the result. Loan principal-and-interest payments are only part of ownership outgoings. The CFPB sources below describe U.S. mortgage mechanics and cost considerations; they do not supply tax, lending or tenancy rules for every country. Use applicable local information and actual terms for those questions.
- Keep one currency and distinguish monthly, annual and initial amounts.
- Use the same comparison period for both paths; loan payments stop at the loan term.
- Try more than one supported value, rent and return assumption.
- Record omitted costs and unknowns; do not call the result a full budget.
- Check actual property and loan evidence rather than treating a model advantage as an instruction to transact.
Frequently asked questions
What does the rent vs buy calculator compare?
It compares modelled end-of-period home equity minus down payment, loan payments and maintenance with the invested initial down payment minus its initial amount and rent paid. It excludes several costs and monthly cash-flow investments, so it is not a complete net-worth comparison.
Can estimated home equity be negative?
Yes. If the modelled property value is below the remaining loan, equity is negative. The calculation retains that shortfall rather than treating equity as zero.
Why can home equity be positive while the buying result is negative?
Equity is property value minus the remaining loan. The buying result also deducts the initial down payment, loan payments and maintenance. In the fictional baseline, equity is 72,000 but the buying result is −6,000 currency units.
Does selecting a different currency convert the amounts?
No. It changes the currency label and formatting only. Convert your inputs consistently using an appropriate dated rate before comparing different-currency offers.
Does buying ahead mean I should buy the property?
No. It describes the difference within your chosen assumptions and this simplified model. Check omitted costs, financing, property evidence, time horizon and local requirements before making a decision.